Spellings, Whitehurst, and Nelnet, Oh My!

Last September we had this story on the $278 million that ED had shoveled to the #1 Republican Congressional campaign corporate contributor, Nelnet. Paid in the form of phony interest payments on old student loans, these giveaways continued after the GAO and OIG issued separate reports waving the red flag on this practice in 2004 and 2005, respectively.

It wasn't until this year, when Nelnet had another bill to present for another $800 million in bogus interest charges that Spellings, under pressure from Kennedy and Miller, decided to let Nelnet keep their $278 million and to finally the Treasury hemorrhage by simply writing a letter, which she could have written the day she became Secretary if she wanted to end the payola. Which she did not, nor did Boehner.

Now we find out that Spellings's research man, Dr. Russ "Scientifically-Based" Whitehurst, did not have much of an appetite for researching the insidious corruption inside his own Department. After whistleblower, Jon Oberg, received a nasty-gram back from Whitehurst after reporting irregularities, it seems that Oberg was shut off entirely from access to ED loan records. Read the whole story--here is a clip:

WASHINGTON — When Jon Oberg, a Department of Education researcher, warned in 2003 that student lending companies were improperly collecting hundreds of millions in federal subsidies and suggested how to correct the problem, his supervisor told him to work on something else.

The department “does not have an intramural program of research on postsecondary education finance,” the supervisor, Grover Whitehurst, a political appointee, wrote in a November 2003 e-mail message to Mr. Oberg, a civil servant who was soon to retire. “In the 18 months you have remaining, I will expect your time and talents to be directed primarily to our business of conceptualizing, competing and monitoring research grants.”

For three more years, the vast overpayments continued. Education Secretary Rod Paige and his successor, Margaret Spellings, argued repeatedly that under existing law they were powerless to stop the payments and that it was Congress that needed to act. Then this past January, the department largely shut off the subsidies by sending a simple letter to lenders — the very measure Mr. Oberg had urged in 2003.

The story of Mr. Oberg’s effort to stop this hemorrhage of taxpayers’ money opens a window, lawmakers say, onto how the Bush administration repeatedly resisted calls to improve oversight of the $85 billion student loan industry. The department failed to halt the payments to lenders who had exploited loopholes to inflate their eligibility for subsidies on the student loans they issued. . . .

Congratulations to Sam Dillon and the Times for finally getting the story out. Read it savor the truth, just in time for Maggie's big day of testifying on May 10. Write your Congressman and demand her resignation and/or prosecution.